A Firm Has the Following Account Balances for This Year

Multiple Choice

A firm has the following account balances for this year. Sales for the year are $600,000. Projected sales for next year are $642,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next year. Retained earnings is expected to increase by $3,500 next year. What is the projected external financing need?

A) $10,520
B) $13,120
C) $18,520
D) $20,720
E) $25,620